MUMBAI - State Bank of India is planning to raise up to 100 billion rupees ($1.21 billion) through the sale of Basel III-compliant Additional Tier-1 bonds, three merchant bankers said on Tuesday.

The country's largest lender has invited bids for the proposed issue on Thursday.

The perpetual bond issue has a base size of 30 billion rupees and a greenshoe option to retain an additional 70 billion rupees. It also has a call option at the end of 10 years and is rated AA+ by Crisil and ICRA.

Last week, Reuters reported that the SBI is looking to raise up to 100 billion rupees via Tier-1 bonds.

The lender plans to raise up to 500 billion rupees this financial year by issuing debt instruments, it had said in an exchange filing in June.

The state-run bank raised $750 million through five-year dollar-denominated bonds at a semi-annual coupon of 4.8750% through its London branch in April. In March, the lender locally raised 37.17 billion rupees through Basel III-compliant perpetual bonds at a coupon of 8.25%.

($1 = 82.4064 Indian rupees)

(Reporting by Bhakti Tambe; Editing by Nivedita Bhattacharjee)